Return on assets (ROA)
Profit divided by everything the company owns: how much it earns on its total resources, however they were paid for.
Worked example · a round-number company
Net income$500M÷Average assets$10.0B=ROA5.0%How to read it
↑Higher is better. Read it next to ROE: a wide gap between them means debt is doing much of the work.
Example Co. 5.0%
Under 3%3% to 10%Over 10%
Banks run near 1%; asset-light software can top 15%.
Keep in mind
- Compare within an industry; asset-heavy businesses always look lower.